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T-Notes Under Pressure In Early Asia Trade, Off Tuesday’s Low


TYH2 is under some pressure at the re-open after recovering from NY lows on Tuesday, as Asia-Pac participants react to the hawkish rhetoric deployed by Fed Chair Powell during NY hours. The contract trades -0-08 at 130-18.

  • A reminder that the cash Tsy curve saw twist flattening around the 5- to 7-Year zone on Tuesday, with 2s cheapening by ~8bp, while 30s were ~6bp richer come the bell.
  • Early risk-off flow was observed in the wake of cautious comments from Moderna’s CEO re: battling Omicron. These headlines shaped broader pre-NY dealing/sentiment, before Fed Chair Powell testified on the Hill, and lingered in the long end of the curve post-Powell. Powell’s commentary was much more hawkish when compared to the initial pre-released comments, as he flagged considerations of a faster tapering pace and the need to retire the term “transitory” when it comes to inflation. Steepener stop outs helped drive the broader post-Powell impetus, while a large FV/UXY block flattener was observed (-14,021/+5,650) in early NY dealing (pre-Powell). A large screen seller of FVF2 121.00 puts was also observed during NY hours (~55K lots).
  • The long end potentially drew some support from month-end extensions and the Fed’s double buyback.
  • Chinese Caixin manufacturing PMI and Australian GDP headline during Asia-Pac hours. U.S. hours will be headlined by the ADP employment print and ISM m’fing survey. Elsewhere, the Fed will release the Beige Book ahead of its December meeting.
MNI London Bureau | +44 0203-865-3809 |
MNI London Bureau | +44 0203-865-3809 |

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